Serco slashes price for Carillion healthcare contracts

Outsourcing giant Serco has secured a hefty discount on its deal to buy a raft of healthcare contracts from failed rival Carillion.

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Carillion's Wolverhampton headquarters

Serco said it would now pay £29.7 million – down from the £47.7 million price first agreed in December, before Wolverhampton-based Carillion's dramatic collapse into liquidation.

The move reflects the fact the contracts will have no working capital and will come with none of the usual warranties in place, as a result of Carillion's failure, according to Serco.

But it said the potential revenues and profitability of the contracts being bought are "substantially unchanged" from its original announcement in December.

Carillion went into liquidation on January 15 after talks to rescue the company failed, leaving in its wake a £900 million debt pile, a £590 million pension deficit, and hundreds of millions of pounds in unfinished public contracts.

A total of 989 jobs have been lost since, with 6,668 saved out of the previous directly employed workforce of 18,000.

Serco's deal will bolster its healthcare business, seeing it add a string of healthcare contracts spanning five acute hospital trusts and another 20 public sector organisations.

Just under 1,500 employees work on the contracts being acquired under the deal.

Serco's existing health operations already generate revenue of over £350 million, employ over 8,000 people, and provide services to institutions such as St Barts in the UK.

Serco employs more than 50,000 people across five sectors, including defence, justice and immigration, transport, health and citizen services.